Choosing the right dividend stock can mean different things to different investors based on their goals, risk tolerance, and other variables. If you are buying a dividend stock and stashing it in your Registered Retirement Savings Plan (RRSP) where you can’t actually access it, the goal might be to generate cash for further investments or grow your stake in the dividend payer through reinvestment.
You can do that in the Tax-Free Savings Account (TFSA), but many investors choose it for their dividend investments primarily because they can access the payouts and start a passive-income stream. Regardless of what your dividend investment goals are, there are three dividend stocks you should consider for $2,000.
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A mortgage company
MCAN Mortgage (TSX: MKP) is a mortgage company with a market value of about $711 million. Although it has expanded its offerings to include other financial products and is diversifying its target market, mortgages remain one of its core business segments. It mainly caters to residential customers.
There are multiple reasons MCAN Mortgage is a compelling pick. It has been rising steadily—about 19% in the last 12 months—and is also undervalued, considering its price-to-earnings of 8.1. However, the most compelling reason to consider this stock is its impressive 8.4% yield. The payout ratio is rock-solid, making the dividend even more appealing.
A larger mortgage company
While buying two mortgage companies for dividends may seem like a bad idea from a diversification perspective, First National Financial (TSX: FN) brings different strengths. The most notable of these strengths is its stellar dividend history. The company has been raising its payouts for 11 years and is counted among the aristocrats. The 5.8% yield is another compelling reason to buy it.
It’s also an appealing pick from a valuation perspective. It’s not undervalued per se, but a fair valuation despite its bullish momentum is a good sign. It’s also one of the largest non-bank mortgage lenders in the country, and this leadership status reflects its fundamental business strengths.
An energy company
You can buy many energy stocks for their dividends, including Canadian Natural Resources (TSX: CNQ). It’s one of the largest upstream energy companies in the country, with assets spread out across multiple countries. It’s also Canada’s second-largest natural gas producer and has the largest natural gas and crude reserves.
The Canadian Natural Resources stock has remained relatively resilient over the years. It recovered nicely from its 2014 slump and enjoyed a solid run in the post-pandemic bullish market without suffering from a correction phase. It also offers a healthy yield of about 4.6% and has a stellar dividend history — 22 consecutive years of growth.
Foolish takeaway
The three dividend stocks are worth considering for any amount of capital you may have. They are intelligent dividend picks that you can hold long term and are consistent and generous enough to start a sizable passive-income stream. You can also grow your stake in the companies in RRSP through reinvestments.
